THE INTERNATIONAL ETHICS STANDARDS BOARD for Accountants (IESBA) recently restructured and revised its Code of Ethics for Professional Accountants. While the IESBA Code isn't specifically geared toward management accounting and finance professionals, it does extend beyond public accountants and auditors to the private sector. At the March 2019 meeting of the IESBA board of directors in New York City, IESBA members discussed the new changes to the Code and debated other hot-button ethical issues that may require future updates. The context of the changes to the IESBA Code is the rapid transformation of technology during the post-financial crisis period, leading to technological disruption that affects the accounting profession.
The IESBA Code contains five fundamental principles that outline accountants' ethical obligations: integrity, objectivity, confidentiality, competence and due care, and professional behavior. "We believe that these fundamental principles remain strong and valid, but they may require new content and applications, and therefore there are new opportunities for complying with them but also risks to compliance," said Stavros Thomadakis, chairman of IESBA and an emeritus professor of financial economics at the University of Athens.
"Confidentiality now has a new dimension related to cybersecurity, proprietary data, databases, and the cloud. That's an example of how an existing principle morphs into something that we never imagined 20 years ago. Objectivity generally means lack of bias-now you have machines and algorithms that learn, so the bias is not just the bias in your head or mine, but it's the potential bias of the algorithm itself."
THE IMPACT OF AI
Major ethical dilemmas related to technology stem from the rise of AI and machine learning, Thomadakis added.
"AI touches one of the fundamental elements of the ethics code, which is the professional behavior and judgment of accountants--how they should exercise ethical judgment to comply with fundamental ethical principles when AI intermixes with learning, judgment, making decisions," he said.
A discussion about the ethics of AI has been raging since the very beginning of AI development. "This is not the same as the ethics of professional accountants using AI, but there is clearly an overlap, and we have to make sure that they are reinforcing each other," Thomadakis noted. "We're not really moving into a world where machines will make all of the decisions; rather...